President Joe Biden vetoed HJRes. 109, a congressional resolution that would have overturned the SEC’s current approach to banks and cryptocurrencies.
Specifically, the resolution took aim at the SEC’s Staff Accounting Bulletin 121, which lays out guidance on how banks can handle customers’ crypto assets — in effect, they must treat those assets as liabilities. Banking groups have criticized this approach as making it prohibitively expensive for them to manage crypto, while regulators argue that it is necessary to protect investors, particularly after the collapse of high-profile crypto firms such as FTX.
“SAB 121 reflects the SEC staff’s considered views regarding the accounting obligations of certain companies that protect crypto assets,” Biden said. a statement. “By invoking the Congressional Review Act, this Republican-led resolution would inappropriately limit the SEC’s ability to put in place appropriate safeguards and address future issues.”
Biden went on to say that his administration “will not support measures that jeopardize the well-being of consumers and investors.”
HJRes. 109 was passed with mostly Republican support — but 21 Democrats supported the resolution in the House, and Majority Leader Chuck Schumer was among the Democrats who supported it in the Senate.
The president had had previously declared his intention to veto the resolution, while Rep. Mike Flood (the Republican congressman who sponsored HJRes. 109 in the House) he argued Biden should reconsider given the “overwhelming opposition to SAB 121.”
Organizations opposing SAB 121 include the American Bankers Association and other financial industry lobby groups, as well as the crypto industry advocacy group Stand With Crypto.
“SAB 121 effectively precludes regulated banking institutions from offering digital custody of assets at scale, as it treats the assets as belonging to a banking institution rather than simply being held by a banking institution,” said the ABA and other industry groups. open letter to President Biden.
The White House announcement left the door open for further negotiations on cryptocurrency regulation.
“My administration is willing to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets, based on existing principles, that will promote responsible digital asset development and payments innovation and contribute to strengthening the leadership of the United States in the global financial system,” Biden said.
